\n<\/p>\n
We\u2019ve got 2024 housing market predictions<\/strong> coming up in this episode. But don\u2019t worry, David and Rob haven\u2019t put their careers on the line to try and guess where home prices will be next year. Instead, we brought the expert panel from On the Market<\/em><\/strong> to give their best real estate predictions so David and Rob remain safe in the eyes of our darling listeners. Dave Meyer, host of On the Market<\/em> and BiggerPockets VP of Data and Analytics, recaps the 2023 housing market <\/strong>and tells us what (and where) to look for as the year\u2019s second half begins.<\/p>\n Dave and the expert investor panel will review everything that happened over the past six months in real estate. From home prices correcting <\/strong>and failing to crash to inventory falling<\/strong> back down to historic lows, days on market dwindling<\/strong>, and the \u201c<\/strong>lock-in effect<\/strong><\/a>\u201d<\/strong> for homeowners, the 2023 housing market turned out to be nothing we would have expected. But is there hope for rental property owners<\/strong> and real estate investors?<\/p>\n To answer that, our guests will give their mortgage rate, recession, and home price predictions<\/strong>. But that\u2019s not all. They\u2019ll also uncover some of the most underrated real estate markets<\/strong> across the nation, all showing strong signs of growth and huge profit potential. Get in before the masses do, and for more up-to-date real estate data, check out <\/strong>On the Market<\/em><\/strong><\/a>!\u00a0<\/strong><\/p>\n Dave: Kathy: Dave: Kathy: Dave: Kathy: Dave: Kathy: Dave: Kathy: Dave: Kathy: Dave: James: Dave: James: Dave: Henry: Dave: Kathy: Henry: Dave: Henry: Dave: Henry: Dave: Kathy: Dave: Kathy: Dave: James: Dave: James: Dave: James: Dave: James: Dave: Kathy: Dave: Kathy: Dave: Henry: Dave: Henry: Dave: Kathy: Dave: James: Dave: Kathy: Dave: Henry: Dave: James: Dave: Kathy: Dave: Henry: Dave: James: Dave: James: Dave: James: Dave: James: Dave: Kathy: Dave: Kathy: Dave: Kathy: James: Dave: Henry: Dave: James: Dave: Kathy: Dave: Kathy: Dave: Kathy: Dave: Kathy: Dave: Kathy: Dave: Kathy: Dave: Kathy: Dave: Kathy: Dave: Henry: Dave: Henry: Dave: Henry: Dave: James: Henry: Kathy: James: Dave: James: Dave: James: Dave: James: Dave: James: Dave: Kathy: Dave: Kathy: Dave: Henry: Dave: James: Dave: James: Dave: Kathy: Dave: \u00a0<\/p>\n<\/div>\n Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here<\/a>. Thanks! We really appreciate it!<\/p>\n Interested in learning more about today\u2019s sponsors or becoming a BiggerPockets partner yourself? Email <\/em>[email\u00a0protected]<\/span><\/em><\/a>.<\/em><\/p>\n Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n
Hey, everyone. Welcome to the BiggerPockets podcast. I\u2019m your guest host today, Dave Meyer. Me and my friends from the On The Market podcast are taking over the BiggerPockets feed.<\/p>\n
Woo-hoo!<\/p>\n
Yeah. This is going to be very fun. We are here taking over the BiggerPockets feed to give you a little taste of what we do on the On The Market podcast where we focus on real estate just like this show, but more on the economics, more on current market conditions. Our whole goal is to provide you, the investor, with data and information and news to make informed decisions based on what is going on in the market today. So what strategies are working best, what markets are seeing the best conditions, that type of information. Today, we\u2019re going to get into all of that. We\u2019re going to start with a recap of the first half of 2023 and talk about what\u2019s been going on in the economy and the housing market for the first six months of 2023. Then I\u2019m going to force our panelists against their will to make predictions, even though it\u2019s very difficult, about what\u2019s going to happen at the second half of the year. Don\u2019t hold us to these predictions, but I promise we\u2019ll have a good conversation about what might happen over the rest of this year.
Then we\u2019re going to go into a conversation about different markets across the US. If you know anything about the housing market right now, you know that certain markets are doing really well, certain ones are doing poorly, and we\u2019re going to break this down for you to help you understand which markets are going in which direction, which ones work with what kinds of strategies so that you can adapt your strategy to the right market conditions. So that\u2019s what we got for you today. It\u2019s going to be an awesome show. If you\u2019ve not listened to the On The Market podcast before, we are a guest panel type of show. I\u2019m joined by three co-hosts. I\u2019ve got Kathy Fettke with me. Kathy, how are you?<\/p>\n
Great.<\/p>\n
Can you introduce yourself to everyone listening?<\/p>\n
Sure. It\u2019s Kathy Fettke. You probably don\u2019t know, Fettke, I think, means little fatty in German, but anyway.<\/p>\n
I did not know that. How have we done a hundred shows together and you\u2019ve just told me that for the first time?<\/p>\n
You just have to know German, I guess.<\/p>\n
You\u2019re just dropping bombs like this right out the gate, wow.<\/p>\n
Right there.<\/p>\n
All right. Well, now everyone\u2019s going to remember you.<\/p>\n
Yeah. Never forget that name. I am a co-founder of RealWealth where we\u2019ve been helping investors buy investment property nationwide for, well, actually 20 years. This is our 20-year anniversary. Of course, I\u2019m a BiggerPockets huge fan and just super happy to be here.<\/p>\n
Nice. We also got James Dainard. James, how are you?<\/p>\n
I\u2019m doing good. I\u2019m excited to be back on the BiggerPockets main channel.<\/p>\n
And for people who haven\u2019t listened to the episodes you\u2019ve been on so far, tell us a little bit about your investing experience.<\/p>\n
I\u2019m a full-time investor out of Seattle, Washington. We\u2019ve been investing since 2005, very active fix and flipper operators, developers, multifamily buyers, but we are backyard investors in Seattle, very active, addicted to the deal guys, deal junkies up there.<\/p>\n
Awesome. Well, thanks for joining us. Then Henry, I know you\u2019re on this show a lot, but we also got Henry Washington. Can you give us a little intro?<\/p>\n
What\u2019s up, guys? Yes. I\u2019m Henry Washington and Henry actually is German for large fatty.<\/p>\n
I didn\u2019t know that.<\/p>\n
I didn\u2019t know that either. Wow.<\/p>\n
Yeah, just magic. Yeah, I\u2019m a real estate investor. I\u2019m based out in Northwest Arkansas. I\u2019ve been doing this since about 2017. Got about a hundred rental properties. We focus mainly on single families and small multi-families.<\/p>\n
All right. Well, thanks for joining us. My name is Dave Meyer. I host this show with David as a guest host every once in a while, but if you don\u2019t know me, I work full-time at BiggerPockets. I\u2019m the vice president of data and analytics. I also host the On The Market show with these fine people and I\u2019ve also been investing in real estate for 13 years or so. So first up for the show today, we\u2019re going to recap what\u2019s been going on in the housing market for the first half of the year. To me, the biggest story is that housing prices have corrected a bit, but despite a lot of news and media attention to a potential crash, they have definitely not crashed. It depends on who you ask. There\u2019s a lot of different data sources. You can look at the Case-Shiller or Redfin or Zillow, but most of them agree that housing prices are down year over year, somewhere between 1% and 3%. We were all talking earlier and saw that the median home price in the US dropped from 449,000 to 441,000.
So it hasn\u2019t been a huge adjustment and honestly, this is a bit of surprise to some people who thought with rising interest rates, we would see a big correction or potentially even a crash. I\u2019m curious, Henry, what are you seeing in your market? Are you seeing this correction type environment or something else?<\/p>\n
Yeah, Dave. I\u2019m actually seeing the exact opposite. When I look at housing prices over the last six months in Northwest Arkansas, we\u2019ve actually been seeing an increase to the tune of $10,000 to $15,000 monthly. So the opposite is true here.<\/p>\n
Yeah, that\u2019s super interesting. Why do you think that\u2019s going on? Is there anything particular about your market that you think is unique?<\/p>\n
Yeah. I think one of the most unique things about my market is the corporations that are here. The economy is based around about three or four major corporations who happen to be pretty recession-proof corporations and they\u2019re actually butts in seats corporations as well. So they\u2019re requiring everybody who works for the company to relocate back to the area and so there has been this trickle of people moving back here, plus they\u2019re continuing to hire through this. So we\u2019ve got new people moving and that is increasing demand and that demand is really increasing in that mid-tier home, to that luxury home price because you have high salaried individuals who are coming and they don\u2019t want to start a home. They want something a little nicer.<\/p>\n
I\u2019m sure you\u2019re seeing this in your market, Henry, but to me, the major reason that we\u2019re not seeing housing prices crash and they\u2019re more in a correction mode is because of low inventory. We talk about this a lot, but there\u2019s not a lot of homes for sale. We actually saw the most recent data in May say that inventory was actually down, which is the opposite of what normally happens. Usually when interest rates go up, there are less buyers and there\u2019s more houses just sitting on the market, so there\u2019s higher inventory, but we\u2019re seeing the opposite of what normally happens. Kathy, do you have any thoughts on why that might be?<\/p>\n
So many thoughts.<\/p>\n
Lay them on us.<\/p>\n
It\u2019s really shocking to a lot of people who thought that inventory would absolutely spike when interest rates went up last year, but when you really look at the bigger picture and go back say almost 18 years to 2005, there was about four million homes on the market. Fast-forward to 2015, about 1.2 million. It\u2019s been on a decline for a really long time, but in 2020, wow, inventory just tanked. Obviously, people weren\u2019t excited about putting their homes on the market during a pandemic, but then it really hit bottom in 2022. Oh, my goodness. It was 240,000 homes in inventory and that is an all-time low. Now we\u2019ve gone up since then. Once rates went up, inventory levels have gone up as well, but still historically low. What we just saw towards the end of June was that again, context is everything because numbers don\u2019t mean too much unless you know what to compare it to.
In 2022, active listings grew by 30,000 at the end of June. In 2023, this is just last week, active listings grew by only 5,848. So why? What is going on? It has so much to do with the lock-in effect when interest rates are now close to 7% at least while we\u2019re recording this show. That keeps people in their homes. But markets move when people exchange things, when people sell and buy and all that. But if you have a huge group of people who just are not willing to sell because they\u2019re not going to find another house that makes sense at 7% when they\u2019re in a 2%, 3%, or 4% rate and probably a much lower price because many people bought homes a while ago, not just last year. When there\u2019s people not selling, that\u2019s also people not buying because people who sell usually buy. They still need a place to live. So it\u2019s just locked. It\u2019s just the housing market is locked and if interest rates come down, we\u2019ll see that loosen up, but in the meantime, we\u2019re not there yet.<\/p>\n
Yeah. I think probably the biggest thing that\u2019s impacting the housing market right now is just this low inventory that no one seems to want to sell and it seems like we\u2019re getting back to the point where we were last year where there is a lot of competition for homes. I was expecting things to be sitting on the market at this time of the year, but I just saw something that days on market, which is a really good measure of the balance between supply and demand, had been going back up as you would expect given these economic conditions. But then they peaked at 27 days, which may sound like a lot, but would be low during a normal time and have come back down to 14 days. That means the average house right now, even with higher interest rates across the whole country is sitting on the market for just two weeks, which is incredibly low in historical context.
James, I\u2019m curious, are you seeing these levels of competition? Because if you don\u2019t know, James invests in Seattle, which has seen one of the bigger corrections in the country, relatively speaking. I\u2019m curious if you\u2019re also seeing an uptick in competition.<\/p>\n
Yeah. 12 months ago, it was looking pretty hairy. The market was dropping rapidly. We saw a 15% to 20% drop off-peak and days on market skyrocketed from under eight to it went up to 42 days in January. What we\u2019ve seen is this, in the last six months or last seven months, days on market have dropped down to eight days in the Seattle market. That\u2019s a huge change in turnaround and we are definitely seeing it. Almost every property that we are listing right now we are selling in the first five days, unless it\u2019s in that really upper echelon pricing and the consumption rate\u2019s there, the buyers are there. To Kathy\u2019s point, I didn\u2019t think the lock-in effect was going to be that impactful, but it is a real thing. There is nothing for sale and the stuff, honestly, if it\u2019s remodeled product, I think the days on market would be even less than eight days. It\u2019s like there\u2019s weird junks in the market that\u2019s actually bringing that eight days up.<\/p>\n
All the way up to eight days, yeah.<\/p>\n
Yeah, it\u2019s outrageous, right? There is not enough product for people to buy. That is the underlying factor right now, but we are definitely seeing a turnaround in our Seattle market.<\/p>\n
So there you have it. I think those are some of the major stories for the first half of the year in the housing market. Prices are coming down a little bit year over year, but they have not crashed. Inventory is incredibly low, which is contributing to why prices are doing what they\u2019re doing, and competition is heating back up. On a macroeconomic level, I\u2019ll just say that obviously, you\u2019re probably aware of this, but interest rates, the Federal Reserve had hiked rates three different times. We\u2019re now at a federal funds rate above 5% and that has pushed mortgage rates up as of this recording, like Kathy said, to the low sevens. As of right now, the economy is still growing. We only have GDP numbers back from Q1, but it did grow 1.1%, which is not super exciting growth, but it did grow. There\u2019s something actually called GDPNow which helps you estimate what GDP is in real time and it\u2019s predicting 1.9% for Q2, so we are expecting to not be in a recession at least at this point of the year.
Now that we\u2019ve recapped what\u2019s going on, it\u2019s time for you guys to do some predictions. It\u2019s our prediction addiction game because everyone loves listening to people make predictions and we\u2019re going to see how good you all are at it. Our first question is in mortgage rates. We\u2019re sitting right around 7% here in the beginning of July. Where will they be by the end of 2023? Think about the new year and we\u2019re heading into 2024. Where are mortgage rates going to be? James, start with you.<\/p>\n
I think they\u2019re going to end about six and a half percent, which is higher than I thought at the beginning of the year.<\/p>\n
Okay.<\/p>\n
I\u2019m not seeing the rates slide as much as I thought they would be at today.<\/p>\n
All right. Kathy.<\/p>\n
I am swinging out there with 5.9%.<\/p>\n
Whoo!<\/p>\n
Maybe it\u2019s wishful thinking, but we have seen inflation trend down and I think by the end of the year, it will be trending much further down. Fingers crossed.<\/p>\n
All right. I like your optimism. Henry.<\/p>\n
Yeah, I am not as optimistic, not because that\u2019s what the data is saying, just because the Fed has said they\u2019re going to continue to raise rates until inflation gets under control. They have indicated that they might do two more rate hikes and I\u2019m going to take them seriously because they\u2019ve done everything they said they were going to do thus far. So I\u2019m at 7.75, seven and three quarters.<\/p>\n
I\u2019m with Henry. I am in the higher for longer camp now. They\u2019ve said they\u2019re going to keep them higher for longer and I don\u2019t have any reason to believe them, so I\u2019m saying 7.5. So Henry and I are close here, but we\u2019ll have to steal this show again at the end of the year and see who\u2019s right. Okay, so we got a pretty widespread there. There was more variance between the four of us than I thought there was going to be. All right, how about year over year housing prices? Just as a recap, right now, we are at about negative one, somewhere between negative one and negative three depending on who you ask year over year housing prices. Henry, start with you. What do you think?<\/p>\n
My gut tells me I think we\u2019re going to continue on the same path, so I think we\u2019re going to stay flat and maybe come down 1% if that. I don\u2019t think it\u2019s going to come down much at all.<\/p>\n
All right. Kathy, are you going to be optimist again?<\/p>\n
I am. I do actually think that we\u2019re going to see year over year prices increase, but ever so slightly. I\u2019m going to just go with 1% for fun, but I actually think it\u2019ll be higher than that. If indeed my prediction of mortgage rates comes down, then we would see more people coming in the market and bidding. They\u2019re already bidding right now. There\u2019s bidding wars again, guys, it\u2019s crazy, even at 7% rates.<\/p>\n
James, what do you think?<\/p>\n
I actually think with the trends that are going on right now and the fact that we\u2019re having multiple offers with a 7% rate and if rates do come down to six and a half like I think, I\u2019m actually predicting about 5% growth.<\/p>\n
Whoa.<\/p>\n
Wow.<\/p>\n
Okay. You think we\u2019re going to stay-<\/p>\n
Wow.<\/p>\n
\u2026 on this trajectory, okay.<\/p>\n
This is bizarre world to me, but I\u2019m just going to go with the bizarre.<\/p>\n
Well, I was thinking earlier today that I was going to revise my forecast, but about, not a year ago, in September 2022, I said I thought in 2023, the housing market would go down 3% to 8% and I\u2019m just going to stick with it. There\u2019s so much confusing data, I\u2019m just going to stick to my guns and say I still think the housing market is going to decline slightly on a national level by the end of the year. All right, for our last prediction, it is GDP growth. If you guys don\u2019t know what this means, it\u2019s just gross domestic product that is basically the aggregate sum of all of the economic production of the entire country. You want it to go up normally. If it\u2019s down for two consecutive quarters, that is what many people believe to be a recession. So I\u2019m curious because I want to know if you think we\u2019re going to be in a recession basically where you think GDP growth will be. Kathy, the optimist, what do you got?<\/p>\n
Well, I think the first quarter was like 2% or something and it was very shocking that the economy was growing in spite of all the efforts of the Fed to kill it. So I\u2019m going with 1.2% as an annual, as the GDP of the year of 2023. So I think there\u2019ll be no recession in other words.<\/p>\n
Okay. I just want to clarify that when we\u2019re talking about GDP, I\u2019m talking about \u201creal\u201d GDP, which accounts for inflation. We are saying that the economy will grow even in excess of the inflation that\u2019s going on. Henry, what do you got?<\/p>\n
I\u2019m similar to Kathy again and similar to my last. I think we\u2019re going to be flat or up about 1%. If you look at the factors feeding into GDP, the jobs report came out. That looks great as far as there\u2019s more jobs available. The consumers are comfortable and are spending money and I just think that that is saying that the economy is strong and it\u2019ll go up a little bit.<\/p>\n
James, are you going to dissent?<\/p>\n
You know what? I\u2019m actually in the herd on this one. I think there\u2019s no recession, but minimum growth at 1%. I think people are still consuming right now. It is slowing down. I just think people have a tough time turning off the faucet right now. They all turn on the faucet during COVID. It\u2019s like I\u2019m going to buy everything. A smart guy told me one time, he\u2019s like, \u201cDon\u2019t ever turn that faucet on because it\u2019s really hard to turn it off. Keep control your expenses.\u201d I feel like America\u2019s having a problem turning it off right now.<\/p>\n
I love how James is telling us not to turn the faucet on while he is recording on his yacht and that is literally what he\u2019s doing. That is not an exaggeration. He\u2019s literally sitting on his yacht telling us not to turn the faucet on.<\/p>\n
You know what? Last yacht, I turned the profit on, Dave.<\/p>\n
Okay.<\/p>\n
After three years, I sold it for more than I bought it for, so-<\/p>\n
That\u2019s pretty good.<\/p>\n
\u2026 I will flip anything.<\/p>\n
Nice. Well, I\u2019m with you, guys. I think it\u2019s a little early to say there won\u2019t be a recession, but I think if it\u2019s going to happen, it\u2019s probably not going to happen in 2023. We had a pretty famous economist named Mark Zandi on the On The Market show a couple of months ago. He coined this term the slow session where it\u2019s basically like we never actually see that negative GDP growth, but it\u2019s this anemic, really slow growth that we\u2019re technically not in a recession, but some people, at least, will be feeling like we are in a recession. As of right now, it does feel like that, so I\u2019m sticking with that. All right, so those are our predictions. Please don\u2019t hold us to them. These are for entertainment purposes only. No. I do think it\u2019s really helpful to just at least talk through why we think these different things are going to happen. Obviously, we\u2019re all just making our most informed, educated guesses and we\u2019ll just have to see what happens in this very confusing economy.<\/p>\n
Educated guesses, but the jobs report was 497,000 new jobs, double what was expected, doesn\u2019t sound like a recession.<\/p>\n
Yeah, it\u2019s wild. If there\u2019s going to be a job loss recession, it\u2019s going to be a while. We\u2019re seeing it go in the opposite direction. It would take, in my mind, quite a while for the unemployment rate to get up to even 4% at this point. It\u2019s going to take at least several months and 4% is still relatively low unemployment.<\/p>\n
Yeah.<\/p>\n
All right. We\u2019re going to move on to our next part of the show where we\u2019re going to be discussing different markets. In preparation for this, I did some analysis over the last few days to just help everyone understand what is going on in the housing market because the stuff we were talking about earlier is all national level statistics. These are aggregations about what\u2019s going on with days on market inventory, but the reality on the ground is very different depending on what market you\u2019re in.
So I looked at the top 137 markets just because those are the ones I felt had enough data for us to make some inferences about it and 41% of them declined over the last year and 59% went up. So there\u2019s a real break in the country right now where it\u2019s not exactly 50\/50, but there\u2019s a sizeable portion that are going in one direction and a sizeable portion that are going in the other direction. The spread between them is honestly crazy. The worst performing market over the last year, I\u2019ll actually give you guys a guess. Anyone got a guess? Single worst over the last year?<\/p>\n
San Francisco.<\/p>\n
Boise<\/p>\n
Henry?<\/p>\n
Yeah. I would say Boise or Seattle\u2019s been rebounding, but that would\u2019ve been my guess.<\/p>\n
All right. Boise was second worst of the top 137 largest. Austin, Texas was the worst with 15% decline in sale price in Austin, which is very significant. Boise was the second worst with 14% and Oakland came in there, but San Francisco, Sacramento, Phoenix, Vegas, those are all up there, a lot of West Coast cities.<\/p>\n
And Seattle came off. We were like number five for a second.<\/p>\n
Yeah. Seattle is doing a little bit better now, but it\u2019s still definitely\u2026 Yeah, Denver\u2019s moved up a little bit, but they\u2019re still not doing the best. They\u2019re still negative. But on the other side of the equation, we have Fayetteville, North Carolina is up 16%.<\/p>\n
Wow.<\/p>\n
So the spread between the worst and the best market is 30% right now. This is why it\u2019s so important to understand what\u2019s going on in your local market and listen to shows like On The Market where we tell you all about this kind of stuff. Because of this spread, and we have this really dramatic difference between markets, I asked each of our panelists to give us an under the radar market that they want to share with the rest of you. We all know what\u2019s going on. A lot of us know it was pretty easy for them to guess what\u2019s going on in big cities like Austin and a lot of the pandemic darlings like Boise and Reno are having the big retractions, whereas a lot of the southeast is known to be going up right now.
But we want to provide you with markets that you don\u2019t know about, maybe you\u2019ve never even heard of these places, that you can look into for your own investing or it\u2019s also useful to just go look at what are some of the underlying factors that are driving the behavior and the conditions in this market and see if they relate to the places that you invest because that could really help you understand what direction your market might be going. So Kathy, I\u2019m going to start with you. What market are you bringing to us?<\/p>\n
There\u2019s no chance anyone\u2019s heard about this market.<\/p>\n
All right.<\/p>\n
Very much doubt it. Are you ready? Thackerville, Oklahoma. This is my-<\/p>\n
What?<\/p>\n
Yes.<\/p>\n
Is that a place? No offense to anyone from Thackerville, but I\u2019ve never heard of that city. Is it a city, a town?<\/p>\n
It is just over the border from Texas. So much growth is spreading out out north of Dallas. The core is getting expensive. DFW is getting expensive, so businesses are moving out and so our people to more affordable places. One of the areas that has grown so much is Gainesville, Texas where home prices were actually up 10% year over year, median price is 305,000. Thackerville is just over the border, 12 miles. So a lot of people will live in Oklahoma and commute to their jobs in Texas because in Oklahoma, the property taxes are much lower. They\u2019re 0.85 versus double, triple or even quadruple that if you just go over the border into Texas. And home prices are lower. The problem is there\u2019s no inventory. There\u2019s hardly anything there. I think there\u2019s 16 homes on the market. So we\u2019re actually starting a build to rent fund there and building some new supply just over the border in Oklahoma to capture those lower prices, lower building costs, lower taxes, and yet rents are pretty high because it\u2019s Texas money going there.
Anyway, that\u2019s my little hack for 20 years, 25 years now have been searching where the puck is going, so to speak. Once you\u2019ve already heard about an area that\u2019s growing, it\u2019s probably too late, so I just like to see where the jobs are going, where population is growing and get right outside of that. Right in front of the path of progress is my favorite.<\/p>\n
That\u2019s a great lesson, Kathy. Just for everyone listening, why did you pick this particular town, first of all, and of all the places where Dallas can expand, Texas is a pretty big place, why this direction? What about it do you think is so compelling?<\/p>\n
Well, Dallas is growing in all directions and like many places, the urban core has become very expensive and there\u2019s higher regulation, whereas when you get out into the suburbs you can get more work done and your employees can live cheaper so businesses move there. But that particular area, we\u2019ve just seen so much growth with businesses moving north that we think that the next frontier is just over the border in Oklahoma. So that\u2019s why. There\u2019s also a casino, WinStar Casino with 3,500-<\/p>\n
Oh, I\u2019m in now.<\/p>\n
\u2026 employees.<\/p>\n
Okay.<\/p>\n
Those employees have no place to live, so they\u2019re actually living in Texas. If there\u2019s housing near them, they\u2019re going to be stoked about that, not have to make that commute and it\u2019ll be cheaper. You also have distribution centers for Walmart, Liberty Energy, Lowe\u2019s. It\u2019s, again, lots of growth, lots of space to grow and for companies to come in and be able to have a cheap headquarters or industrial space or warehouse space and still have a massive metro nearby.<\/p>\n
I like it. Henry, I think I owe you an apology because I used to think that where you invest is obscure, but Thackerville, Oklahoma might beat you on the obscurity index. But that\u2019s what we asked for, so Kathy, A+ on the assignment. This is great. Well, with that, let\u2019s move on to Henry. Tell us about what under the radar market you want to talk about.<\/p>\n
Yeah. Obviously, guys, I\u2019m going to talk about my backyard. I invest here. I\u2019m talking about Northwest Arkansas. This is a small, I call it a little bubble up here in the northwest corner of Arkansas. We\u2019re about three and a half hours northwest of Little Rock. So we\u2019re sitting right on the border of Missouri and Oklahoma. This area, for several reasons, makes it a phenomenal real estate market. So to talk about some of the economics, we have very large corporations here, recession-proof corporations like Tyson Foods, JB Hunt transportation, and then Walmart all headquartered right here in Northwest Arkansas. These are companies that are going to do well if we do go into a recession. Walmart is the place people shop when money gets tight and you have to get stuff to places, so transportation\u2019s always going to be a thing, and everybody eats chicken.
So you\u2019ve got just these recession-proof companies, but the key there is these companies are butts in seats companies. They want people living in the community where these companies are headquartered and so people have been moving here at a crazy alarming rate. I think the last statistic I saw was about 35 to 38 people per day-<\/p>\n
Wow.<\/p>\n
\u2026 move to Northwest Arkansas. What that does from a real estate perspective is it creates the things that you want as an investor. You get cashflow and depreciation. You get cashflow because we\u2019re still Arkansas. So you can buy on the lower end of the housing price scale, but you can rent on the higher end because you\u2019ve got people who have large salaries that are moving here. Some don\u2019t want to buy a home here, so they\u2019re renting and so rent prices are high. You can buy low and then inventory is so low. So if you\u2019re going to turn properties or flip properties, you\u2019re able to capture pretty good profits doing that. We\u2019re getting multiple offers. But to give you some of the numbers from the real estate perspective, we have about 1,500 homes on the market right now. We would need to be at about 5,000 active listings for our market to be considered a buyer\u2019s market.<\/p>\n
Wow.<\/p>\n
The average days on market seems high at 94 days, but we would need to be at 120 days. But if you look at the median eight days on market, the median days on market is 56. So that means between when a house is listed and then when it goes under contract, it\u2019s typically about 21 days. So it\u2019s pretty quick. Now, things that are rehabbed and are rehabbed well are trading a lot faster. Things that are crap are trading a little slower, but that\u2019s just a sign of a healthy market. That\u2019s what should be happening. Our rent vacancy across Northwest Arkansas, 1.5%. So there\u2019s demand for anything that\u2019s available to live in. If you have a rental and it looks halfway decent, somebody\u2019s going to be living in it and we\u2019re at about, for an apartment, average rent is a thousand dollars. But that\u2019s an apartment. If you\u2019re looking at single family homes or duplexes and things like that, average rent somewhere between 1,200 and 1,500.
I call it a real estate investing unicorn. There\u2019s great economics. There\u2019s affordability. You get appreciation. You get cashflow. We have just been seeing an increase in buyers entering the market, decrease in days on market. It\u2019s not done what a lot of these markets seem to be doing across the country.<\/p>\n
Wow. It\u2019s unbelievable. Every time you talk about it, I want to fly over there and check it out for myself. All right, let\u2019s move on to James. What market are you bringing? You can\u2019t say Seattle because that is definitely not under the radar.<\/p>\n
No, it\u2019s definitely not under the radar. I\u2019m so impressed with Kathy\u2019s pick though. The population is 440 people in this town. I like her approach though because it\u2019s like, oh, the population grew by 20%. It\u2019s like, okay, but it\u2019s got upside in here.<\/p>\n
One family moved in, 20% increase.<\/p>\n
Yeah.<\/p>\n
I actually picked a place and it kind of caught me off guard when I was researching this was Green Bay, Wisconsin.<\/p>\n
Titletown.<\/p>\n
Yeah. The reason I pick Green Bay is because it was ranked on numerous places the number one, best place to live in the US and that\u2019s what they\u2019re predicting for the next year. One thing that I\u2019ve realized, the pandemic has changed everybody\u2019s mindset so much is they just want to live where they want to live and be comfortable. What it did is it took Americans off this grind mentality that we had before where it was like go, go, go, go, go. People have realized they just want to live in a nice place that\u2019s affordable. So I do think that\u2019s a big factor in my decision. Right now, the median home prices are still up 9% year over year, so it\u2019s constantly growing. The average home sells for 5% to 11% over list right now.<\/p>\n
Wow.<\/p>\n
The 11% is more like those hot homes that are renovated and the ones that are more duds are still selling for 5% over list. The sale of the list is at 105% right now. I like the affordability of the market. One thing I\u2019ve learned is when rates started skyrocketing, I actually thought the more affordable markets were going to have more issues because it\u2019s going to really affect the bottom line, but it\u2019s been doing the opposite for the last six months. The median home price is 240,000. It\u2019s a cheap, affordable place. It\u2019s a great place to live besides the weather. That\u2019s why it caught me off guard. That cold, cold weather would be my only hang back. One sneaker stat is it\u2019s a huge cheese industry and the average price of cheese is 32% higher on a five-year average. So the cheese-<\/p>\n
Did you just go and look up cheese futures or something?<\/p>\n
I did because I was struggling to find the economy in there. I was like, well, I know they like cheese and I know they produce a lot of cheese. I do think we\u2019re in the shift of globalization slowing down and we\u2019re going to be buying a lot of stuff. Hopefully, we\u2019re buying a lot more American-made products and that\u2019s what the train could be and cheese could be a factor in that. But I\u2019m coming back to it. It\u2019s affordable. It\u2019s a quality place to live. I do think some of these metro cities in Milwaukee, Chicago, the livability has dropped a little bit and people just want a simpler, easier lifestyle. There\u2019s a lot of migration from those two metro cities going up that way and we\u2019ve seen that across the board in all these markets is like the metro cities, people are getting a little bit away from them right now.
It\u2019s almost like the \u201980s where people are starting to leave the metro and they want to be more in the suburbs. They want peaceful living and that\u2019s why I\u2019m basing my prediction on that. But it\u2019s currently growing. It\u2019s growing and number one livable place to live,-<\/p>\n
Wow.<\/p>\n
\u2026 except for me, because I want no seasons. I like sun only.<\/p>\n
Yeah. Well, I think we\u2019ve hit the peak of this show now that we\u2019re talking about cheese pricing on it. I\u2019m very pleased this is how this has evolved. Well, it is great. James, I do want to call this out because I agree. One of my investing thesis is that affordable cities are really going to pave the way for the next couple of years, but I think it\u2019s important because people ask me all the time, they\u2019re like, \u201cOh, this so-and-so city. It\u2019s really affordable.\u201d You can\u2019t just buy anything just because it\u2019s affordable. There has to be a draw to that area. When Henry\u2019s saying it\u2019s affordable, but there\u2019s a huge economic engine. James is saying, yeah, maybe cheese prices are going up, but also, that it\u2019s a really high quality of life place to live that\u2019s going to attract people.
So I do think there is some logic that affordability is going to drive some future housing market trends, but obviously, you need to make sure whether it\u2019s economic, quality of life, weather, taxes, something that is going to draw people to the city because at the end of the day, it all comes down to supply and demand and you need to be able to measure where demand is coming from.<\/p>\n
Well, remember, Thackerville has a casino.<\/p>\n
Okay, Thackerville, it is. I feel like we should go on a roadshow and go to all these places. I want to see Thackerville. We\u2019ll double the population. Well, just-<\/p>\n
That\u2019s right.<\/p>\n
\u2026 the four of us show up. Well, thank you all for bringing these under the radar markets. Some of them, Kathy, a little bit more under the radar than other, but this is really helpful and hopefully it\u2019s helpful to all of you in trying to understand how you can find your own markets. You don\u2019t obviously need to invest in these three markets, but I think that the logic and reasoning and research you did is really applicable to really anyone who wants to invest in real estate. That is our show. I do want to thank David Greene and Rob for allowing us to take over the show. Hopefully, you like this. If you do, pop over to the On The Market podcast. You can just find it on Apple or Spotify or wherever you listen to podcasts. We come out every week on both Mondays and Fridays and bring this type of data, news-focused information for real estate investors. So come check us out there. If you want to connect with the fine investors and host on this show, I will help you do that. Henry, where can people connect with you?<\/p>\n
Yeah, Dave. Thanks. The best place to catch me is on Instagram. I\u2019m @thehenrywashington on Instagram. Also, the same on Threads now because that\u2019s a thing. So check me out on Instagram or Threads or you can check out my website at henrywashington.com.<\/p>\n
James, where can people connect with you?<\/p>\n
Best way to connect with me is probably on Instagram @jdainflips or jamesdainard.com. I just found out about Threads, so I\u2019ll try to figure that whole thing out.<\/p>\n
So James will be on it in two or three years given his pace of technological adoption.<\/p>\n
That\u2019s about right.<\/p>\n
Okay. And Kathy, what about you?<\/p>\n
You can find me at realwealth.com or Instagram, Kathy Fettke. Remember what that means.<\/p>\n
And I am @thedatadeli on Instagram or you can always find me on BiggerPockets. Thank you so much for listening. Hopefully, we\u2019ll see you next time on the On The Market feed.<\/p>\n